Canadian stocks rated by Iain Fraser

GM - cheapest stock ever!

We have been rating stocks with our new platform for about three years.

General Motors ($26.00) is in the cyclical category and has a book value of $52.45 (stock is selling at less than book); and the cashflow for the next 12 months is estimated at $30.00 (less than cashflow). After we go through our formulas the number comes in at 0.25  - the most undervalued we have ever had. Our previous lowest was Algoma Steel last August when the stock was $13.00 and our number was 0.34, and the stock ran up to $40.00.

The huge caveat on GM is the debt is about $300 billion.

Home Depot - A Bargain

Home Depot ($36.05) just keeps on making more money.

At its present price the stock is a bargain and even if the price of the stock moved up 50% to $48.00 - it would still be undervalued.

Earnings for last year were $2.55 per share and for the current year the concensus estimate is $2.90 which means that the P/E is less than the growth rate! The normal is for the P/E to be at a premium to the growth rate.

The company has very little debt and no defined pension plan and is one of the 30 stocks that make up the Dow Jones Industrial Average. If you would like a list of other Dow stocks that are substantially undervalued just email us at fraserratings@yahoo.ca

Iraq

Our forte is stock rating. But we want to state our views on Iraq and, of course, Iraq developments are factored into the stock market.

Our view is that the attempt by the Allies to make Iraq democratic will not work. The Allies have been there for over two years and it was C&M(chaos and mayhem) when they got there and nothing has changed. It is doubtful that democracy can be imposed in that part of the world.

We think it is only a matter of time until Iraq, like Iran, will become a theocracy, or there is civil war.

The Allies, and particularly the American presence, in Iraq is clearly too costly in terms of both human casualties and the huge financial strain on the U.S. budget.

It is time to start pulling the troops out. There is a chance that one day soon the Allies will admit that they are not wanted there and hopefully this will be the signal to bring an end to a noble effort - but one that could not be consumated.

Trouble? Short or long term?

The market both here and in New York is in trouble.

Is this a correction in a continuing bull market or is the bull over?

We have a total of 20 measurements and we rate each one plus, minus or neutral and the majority wins. The last time there was a change in the U.S. in the primary trend as signalled by our indicators was in May/June of 2003 and the market kept going up for the next 21 months. Not bad.                                                         

In our Report this week we will rate these 20 indicators and conclude whether they indicate a change in the primary trend or a correction only. If you would like to see this Report just email us at: fraserratings@yahoo.ca

CIBC; Cdn.Tire; and Noranda

On March 10/05 we published a list of the 60 stocks that make up the S&P/TSX 60 Index. We arranged these stocks with those that were most undervalued at the top and those most overvalued at the bottom. 

The first stock was Canadian Tire ($58.70) and we are happy to report that it is up a modest 3%; the market is down slightly in this period.  But, more importantly, on the charts Tire now has an upside breakout and measures up to $63-$65.

CIBC ($73.15) was #6 on the list and is up 6% and Noranda ($24.35) was #8 and is up 5%.

If you would like to see the complete list just email us at: fraserratings@yahoo.ca

Wells Fargo and Caterpillar undervalued

Wells Fargo ($59.65) is an historic name in U.S. banking. The stock is undervalued and even if it were to sell up to $80.00 in our view it would still be undervalued.

Caterpillar ($90.50) is another Dow stock that would be undervalued even if it sold up to $125.00.

If you would like our complete comments on these two stocks just email us at: fraserratings@yahoo.ca